Of all frauds perpetrated against financial institutions, mortgage fraud, in particular, has spiked, the Office of Thrift Supervision (OTS) said in a report released this week.

During 2009, the Federal Bureau of Investigation (FBI) delved into more than 2,100 mortgage fraud cases, up 400 percent from five years ago. According to the OTS report, the increase can be attributed to declining economic conditions, liberal underwritings, and declining home values.

While the total dollar loss attributed to mortgage fraud is unknown, at least 63 percent of all pending FBI mortgage fraud investigations during fiscal year 2008 involved dollar losses of more that $1 million each.

With the rapid growth of real estate markets and the development of new technology associated with refinancing and computer-driven underwriting methods, the opportunity for mortgage fraud continues to escalate.

The OTS says warehouse lines have been particularly vulnerable, with their 90-day window of “purchasing” mortgages and awaiting ultimate repayments from final investors.

The FBI reports that equity stripping and property flipping are common schemes. This problem is compounded in instances where an institution has ineffective policies and procedures that are poorly formulated or outdated.

The FBI estimates that 80 percent of all mortgage fraud involves collaboration or collusion by industry insiders. Overall though, according to an FBI Financial Institution Fraud and Failure Report, external fraud schemes outnumber those involving insiders due to the pervasiveness of check fraud and counterfeit negotiable instrument, technological advances, and the availability of personal information through illicit information networks.

The FBI reports that mortgage fraud schemes continue to adapt as the economy changes and that individuals are victimized even as they are about to lose their homes.

Foreclosure rescue scams take several forms but usually involve payment of an upfront fee in exchange for a promise to resolve a pending foreclosure, the OTS report explained. Ultimately, the scam results in unsuspecting victims losing their homes to foreclosure.

While this type of fraud is not perpetrated directly against the bank or thrift, the end result can still have a negative impact on the lender, according to the federal regulator.